Boys, I want to share with you what MonitorGuru sent to me. It's the explaination I was looking for. Up until I read this, I didn't understand the fundamentals of AC power generation. He makes it very very clear in this PM he sent, I thought it soooo good I had to share it with the group!

Monitor Guru wrote:
Isolation means isolation of both hot and neutral from the earth ground/neutral.
You need to understand how electricity works and is fed to your home.
Basically high voltage wires only carry the "hot" line to your neighborhood transformer before it comes into your house. The "return" line is in fact, the earth. It's set up this way at the power plant. This way they don't have to send electricity over 2 wires, one hot, one neutral. The power is instead sent over one wire, hot and the other wire is the earth itself.
Therefore before the electricity comes into your home, the neutral wire is physically attached into the earth...not to the power plant. This neutral line, along with the hot wire come into your house. Once in your house, a third line is added, a ground wire, which is connected to the water pipe comming into your home.
These three wires are then sent throughout your house to all outlets. *TECHNICALLY* you only need 2 wires... HOT+Neutral *OR* Hot+Ground, either way they form a complete circuit.
The addition of ground was done so that if there was a short, the power is returned to ground sooner (inside your home) rather than later (at the transfomer down the street).
Therefore testing a regular AC outlet will show that HOT to NEUTRAL = 120 volts. HOT to GROUND *ALSO* = 120 volts, while NEUTRAL to GROUND should = 0 volts, if wired properly. If you set the meter on ohm resistance however, you will find a significant resistance between neutral and ground, due to the longer wire run to the transfomer outside your house, which makes sense.
Okay, now that you know that, you can then see why a hot chassis can shock you.
A hot chassis means that electricity is directly connected to the main hot wire (as well as neutral) comming in. However all the metal on the monitor is electrified because it's forming a loop between hot and neutral. If you touch the monitor as it's running not isolated... guess what... the electricity will always find the SHORTEST PATH TO GROUND. Unfortunately that means you and not the neutral line. Yes, if you are not standing on wet floor and not barefoot, you have a significant amount of resistance, greater than the copper neutral wire in the wall, but you will still pick up a shock. It may not be the full 120 volts/15 amps, but it definitely will be felt, and vary depending on humidity/etc..
Okay... in this case, if you held a multimeter to any metal part of the monitor and touched the lead to the ground on an outlet, it should read 120 volts.. Touch the opposite lead to concrete floor and it will read a bit less but will not be zero volts. Again, electricity wants to take the shortest, quickest route to ground since that is the return point being created at the electric plant itself.
Given this, if you put an isolation transformer on, you isolate the creation of power into it's own sealed loop (the secondary winding on the transformer). Therefore there is no potential difference to earth ground. It's not part of the loop. Therefore if you now test a metal part against ground (or even neutral of an outlet) you should see 0 volts. The only path to neutral is directly through the windings of the power supply and nothing else. It's "isolated" from another power source.